Bangkok--15 Nov--Sahaviriya Steel Industries
SSI posted a net loss of Bt. 2.96 billion in Q3/2011 with total Bt. 13.44 billion revenue from sales and services, the second highest quarterly revenue after Q1/2010. Increased Premium Value Product ratio to 41% and achieved 25 million tons record of HRC production. Bt 5.27 billion gain on Teesside facility acquisition was recorded. Sahaviriya Steel Teesside plant will be ready for Slab Production on January 6th after additional remedial work on the blast furnace found. After recent price correction, steel market is recovering and robust demand expected after flood.
Mr. Win Viriyaprapaikit, Group CEO and President of Sahaviriya Steel Industries Plc. (“SSI”) revealed that in Q3/2011 the Company and its subsidiaries realized total revenue from sales and services at Bt. 13.43 billion, 16% up from the same period last year, and a net loss of Bt. 2.96 million. For the nine months period, the total revenue of Bt. 34.96 billion was realized, 6% down from the same period of last year, and net profit was Bt1.39 million.
The increase of sale and service revenues was driven by several factors. HRC Business recorded Bt. 10,373 million revenue, 34% up QoQ. HRC Sales volume was 414 k tons, 26% up QoQ, average selling price Bt. 24,504/ton, 6% up QoQ, but cost of goods sold was only 4% up QoQ. Ratio of Premium Value Product to total sales increased to 41%. This was due to the recovery in auto industry, the government action in anti-dumping, and uptrend in global steel price. Iron and Steel Making Business, whose only revenue was still from coke operation, recorded Bt. 2,994 million revenue with coke sales of 220 k tons. Deep Sea Port Business recorded service revenue of Baht 28 million and Engineering and Maintenance Service B usiness recorded service revenue of Baht 45 million.
“Following SSI’s 2-prong strategy to “innovate premium value products” and “integrate world class steel businesses”, SSI achieved second highest consolidated quarterly revenue of Baht 13.44 billion in Q3/2011, following Baht 13.86 billion in Q1/2010. SSI also successfully became the first steel manufacturer in Thailand to achieve a historical record of 25 million tons accumulated production of HRC. The company also recorded Baht 5.27 billion gain on acquisition of steel making facility in Teesside.
Nonetheless, HRC Business recorded provision for loss under onerous contracts of Baht 129 million relating to HRC business to reflect recent softer steel price. Iron and Steel Making Business recorded extraordinarily high cost of non-operating expenses, selling and general administrative expenses, and interest expenses at total Bt. 2.316 billion. These expenses will become normal cost after the slab production restart.” Mr. Win said.
Mr. Win said that SSI UK restart project is progressing well. The target restart date has been changed to 6 January 2012, due to some additional remedial work on the blast furnace that has been identified. Slab output for 2012 is forecast at 3.3 million tons, with a ramp-up to an annualised rate of 3.6mtpa by Q4 2012, which will contribute significantly to our revenue growth and business strength. The Company also launched the PPC Shore Crane project, which will install 2 100-ton harbor cranes at Prachuap Port, helping to save freight cost by using larger vessels. The project is expected to be commissioned in April 2012.
“In October, iron ore and steel prices had seen a big correction due to China’s inflation and property bubble control measures and intensifying Eurozone crisis. Prices has since bottomed out and recently seemed to firm up again. Domestically, Thailand’s flood situation will weaken steel demand in short term. However, the company remains positive on the longer-term outlook that the economic and industrial activities will resume gradually post flood and then more vigorously when the government budget to rebuild infrastructure and rehabilitate industries kick in. We expect robust demand for our products in the medium and long term.”